Gentherm (NASDAQ:THRM) reported first-quarter 2026 results that management said exceeded expectations, driven by higher automotive volumes, outperformance in China and early benefits from operational initiatives aimed at improving execution and financial discipline.
Management highlights operational changes and strategic direction
CEO Bill Presley said the company’s first quarter reflected “strong execution” and progress from an operating system overhaul that has been underway for the past year. Presley said he visited multiple Gentherm sites in recent months and observed improvements in factory space utilization, efficiency and adoption of tools designed to increase “financial rigor.”
Presley also emphasized that macro and geopolitical shifts have increased economic uncertainty. He cited emerging headwinds including higher logistics costs from lane disruptions and fuel surcharges, as well as rising petrochemical-related raw material costs and broader inflation in other materials tied to processing costs. Presley said the company is preparing to implement “pass-through or reimbursement mechanisms on applicable costs” and is working with suppliers and customers on mitigation strategies.
First-quarter results beat expectations; China and lumbar/massage stand out
CFO Jonathan Douyard said revenue was $394 million, a quarterly record and up 11.3% year-over-year, reflecting stronger automotive volumes and outperformance in China. Excluding foreign currency translation, revenues increased 7.2%.
Douyard said Automotive Climate and Comfort Solutions revenue increased 13.6% year-over-year (9.8% excluding FX), with growth “across all regions and product categories.” He highlighted particularly strong performance in China, attributing it to ramping production on new program launches with domestic Chinese OEMs and increased take rates from global OEM customers “as they look to remain competitive in the market.”
By product, Douyard said Lumbar and Massage Comfort Solutions revenue grew 33% year-over-year, and he reiterated the company expects “this strong growth trend” to continue as previously won programs launch.
On profitability, Gentherm delivered adjusted EBITDA of $49.3 million, or 12.5% of sales, up from 11.1% a year earlier. Douyard said the 140-basis-point improvement was driven primarily by operating leverage and “strong net material performance,” partially offset by annual price reductions and higher labor costs.
GAAP diluted EPS was $0.14, which Douyard said included an impact of approximately $0.70 per share from merger and restructuring expenses. Adjusted diluted EPS was $0.84, up from $0.51 in the prior-year quarter.
Douyard said cash flow remained a focus, noting a “typical seasonal operational cash outflow,” but with an $8 million improvement year-over-year. Capital expenditures were $5.6 million, down $9.2 million from the prior year, as the company continued to scrutinize investments. Gentherm ended the quarter with net leverage of 0.2x and liquidity of $456 million.
Presley also said the company secured $395 million of automotive new business awards in the quarter, describing the wins as “well-balanced across region, customer, and product,” and said the pursuit pipeline “looks robust” for the rest of the year.
Non-automotive initiatives: furniture launch and ThermAffyx regulatory milestone
Presley said Gentherm continued expanding beyond automotive, pointing to progress in home and office and medical.
In home and office, Presley said Gentherm “officially launched and began supplying production parts to KUKA HOME,” a global furniture manufacturer, following a collaboration that resulted in co-branding under “Enhanced Comfort by Gentherm.” He said the launch demonstrates Gentherm’s ability to generate revenue quickly using a “standard kit methodology” while maintaining the quality and consumer experience established in automotive.
Presley also said Gentherm was selected earlier in the month by a “leading North American furniture brand” to supply climate and comfort products, marking the fourth consecutive quarter the company secured a new home and office customer, with production expected to start later this year.
In medical, Presley said Gentherm submitted an FDA 510(k) for ThermAffyx, which he described as a patented system combining “conductive air-free patient warming with securement technology” aimed at helping prevent hypothermia and patient movement during robotic procedures. He said the approval process remains on track and the product is expected to begin generating revenue later this year.
During Q&A, Presley said the furniture business offers “super quick time to revenue” with little to no investment and projected it could reach $50 million to $100 million in revenue by 2028, adding “1%-2% growth at accretive margins in the coming years.”
Modine Performance Technologies deal: integration planning and regulatory progress
Presley reiterated that the planned combination with Modine Performance Technologies is intended to expand Gentherm’s product portfolio and end-market exposure beyond light vehicles, including access to “power generation, commercial vehicles, and heavy-duty equipment.” He said the transaction is an “inflection point” in the company’s transformation and described Modine’s business as well-run, with lessons Gentherm expects to apply internally.
Douyard said the companies have established an integration management office and held a kickoff integration summit in March at Gentherm’s Michigan headquarters. He said the plan is to operate Modine Performance Technologies as a standalone division, meaning integration will focus more on “corporate systems and functional support” rather than complex facility or organizational integration.
Douyard added that the companies received Hart-Scott-Rodino clearance from the Federal Trade Commission in March and continue preparing an S-4 filing. He said the transaction is still expected to close later in the year.
Guidance maintained amid uncertainty; costs expected to rise in Q2
Despite first-quarter outperformance, Douyard said Gentherm is maintaining its full-year 2026 guidance due to macro uncertainty. The guidance excludes any impact from the planned combination with Modine Performance Technologies.
- Revenue: $1.5 billion to $1.6 billion
- Adjusted EBITDA: $175 million to $195 million (midpoint margin about 12%)
- Adjusted free cash flow: $80 million to $100 million
- CapEx: $45 million to $55 million (about 3% of sales)
Douyard said the company expects revenue to be “spread fairly even throughout the year,” but anticipates margins will be depressed in the second and third quarters. He attributed the pressure to inflationary impacts from the geopolitical environment, which he estimated at roughly $20 million of incremental costs for the year (a “gross number”), as well as expected gross margin headwinds from depleting inventory bank builds as global footprint transitions are finalized later in the year.
On the cost inflation, management said Gentherm does not have contractual escalators in place for these items. In Q&A, the company said it will need to work through recovery mechanisms with customers, with costs expected to begin hitting in the second quarter and recovery expected to lag, flowing in the second half of the year. Douyard said freight accounts for about a third of the incremental costs, with the remainder tied to commodities and processing-related impacts.
Addressing a question about General Motors suspending a next-generation electric truck program expected to launch in 2028, Douyard said the impact is expected to be neutral for Gentherm because the company has also won ICE content on the platforms and anticipates ICE volumes will compensate for EV losses.
In closing remarks, Presley said Gentherm is working through a “multi-year journey” focused on profitable growth, operational excellence and financial performance, adding that the company is “at the beginning stages of transforming Gentherm into more than an automotive component supplier.”
About Gentherm (NASDAQ:THRM)
Gentherm Incorporated (NASDAQ: THRM) is a global developer and supplier of advanced thermal management technologies for automotive, specialty vehicle, medical, consumer and industrial markets. The company’s core focus lies in delivering integrated heating and cooling systems designed to enhance energy efficiency, comfort and safety across a wide range of applications. Gentherm’s product portfolio includes seat thermal systems, heated and ventilated seating surfaces, steering wheel heaters, battery thermal management solutions, and climate systems for electric vehicles.
In the automotive sector, Gentherm partners with leading original equipment manufacturers to engineer and manufacture high-performance thermal solutions that meet stringent industry demands for reduced weight, lower energy consumption and improved passenger comfort.
